How to haggle down your medical bills

Consumers are finding creative ways to avoid health-care debt

By

JenWieczner

Patients come to Linda Adler when their medical bills start piling up and they can’t pay them. She’s not a doctor or a financial adviser, but an expert at negotiating for reduced bills, extended payment plans, and delayed bill due dates.

Stuart Jenner / Shutterstock.com

High medical bills are often cited as a major contributor to consumer debt and personal bankruptcy. In rare cases, medical bills have even landed consumers in jail, after they were sued by a collection agency and didn’t show up in court. But as the Affordable Care Act attempts to attack the problem by reforming the health-care system from the inside, focusing on insurance practices and doctor fees, patient advocates like Adler say Americans, both insured and uninsured, might have a better alternative: Going around the system altogether.

“People have started figuring out all these other workarounds,” says Adler, founder and CEO of Pathfinders Medical, which offers help with health decisions and related financial issues. One client, says Adler, worked directly with her doctor to agree on a medical bill payment plan that spanned decades. Another client went around the insurance company and inpatient setting and negotiated directly with the company providing the health services. The workarounds “are not pretty, and they’re long-term, but at least it keeps the bill from coming due right away,” Adler says.

That type of under-the-table haggling may become an increasingly viable alternative for patients, especially as health reform puts the prices Americans pay for health services in the spotlight more than ever before. This week, the Health and Human Services Department released a trove of new data on what hospitals charge for services all over the country. For example, a joint replacement can cost as little as $5,300 in Oklahoma but as much as $223,000 in California, HHS said in the release.

And with many Americans ill-equipped for the expenses of getting sick or injured, health providers may be inclined to settle for whatever money they can get. A study of 1,001 middle-income Americans released this week by the Washington National Institute for Wellness Solutions found that 90% of survey respondents said they were not financially prepared if they fell critically ill, with 28% saying they would have to charge the costs on a credit card. That finding was consistent with a recent report from insurance company Aflac, released at the end of April.

But financial experts warn against putting medical expenses on plastic, since interest fees on the balance can exacerbate financial problems. Rather than charging the whole bill at once, Santa Fe-based financial adviser Manisha Thakor, CEO of MoneyZen Wealth Management, recommends negotiating with the hospital to pay the bill in affordable installments — with no interest or at least a lower rate than credit cards offer. Another option is to keep appealing the insurance company’s decision, says Adler: The appeals process will keep the bill out of collections, buying some time for the patient to come up with the funds.

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After all, as more consumers struggle to pay their medical bills, hospitals are more likely to bend their own rules to get more patients to pay up. About 20% of Americans have problems paying their medical bill, according to the nonprofit Center for Studying Health System Change, a figure that has remained relatively consistent over the past few years. Those troubles translate to bad debt for hospitals, and those mounting debts may lead them to make deals with consumers to recoup at least part of it, says Alwyn Cassil, director of public affairs for the CSHSC: “At the end of the day, the hospital wants to get what it can get, because something is better than nothing,” she says.

For that purpose, health systems are building in resources for circumventing their own billing procedures. Often this is an office known as the patient relations department, a place dedicated to handling the hordes of patients who try to bargain down their medical bills, who are generally referred there after expressing their grievances to the billing office. Stanford Hospital & Clinics, the health system affiliated with the university in Palo Alto, Calif., has long offered financial counseling to patients who need assistance paying for services. “Given the complexity of health insurance and medical billing,” the financial counselors “help patients navigate their payment options,” including determining whether they could be eligible for government aid or additional insurance, says James Larkin, spokesman for the hospital. Another reason for the program: Helping people resolve payment issues can improve patient satisfaction, a metric that’s increasingly important to a hospital’s efforts to get funding. “The program continues to be highly successful,” Larkin says.

Patient advocates caution, though, that hospitals don’t negotiate from a purely altruistic standpoint, since they are still looking to the system’s bottom line. For that reason, experts often recommend hiring a professional medical bill negotiator or patient advocate to help bargain down the bills. There’s just one problem: When consumers need help with bills they truly can’t afford, they usually can’t afford to pay for a medical advocate either. In these cases, some advocates will agree to work on commission, taking a percentage of what they are able to knock off their bill or recoup in insurance reimbursements.

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